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Financial Sector ETF May Break Below Price Gap

Our research team warned of a peak in the Financial Sector ETF on June 10, 2020, with this article.

It was important to understand the technical setup that existed at that time and what the Fibonacci Price Modeling system was showing then.  There was very clear support near $23 that was highlighted by the Fibonacci Price Modeling System and we were very clear in our future price predictions within that article…

“The $27 price peak sets up directly between our two Fibonacci Daily upside price target (Peak) levels.  We believe this setup is a very strong indication that a move to below $23 may be setting up over the next 30+ days.  The Q2 data may very well push investors to re-evaluate the potential for the Financial sector if delinquencies and at-risk borrowers continue to default in greater numbers. “

The timing of our original article could not have been better for skilled technical traders.  Since that June 10, 2020 article posted, the XLF price has fallen almost exactly to $23 (-10.15%).

Currently, the FLX price is recovering just above the price gap that will act as the next “window” for the price to attempt to fill.  Skilled technical traders should watch the Breakdown Gap that setup between June 10 and June 11 as an upper window of resistance (between $25.20 and $24.35).  It is very likely that the XLF price may attempt to breach or fill this gap window before initiating another downside price move targeting levels below $22.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

DAILY XLF CHART

It is our opinion that should sudden price weakness drive price levels lower, away from the upper gap range, then weakness in the financial sector could create a series of new lower price gaps as XLF price levels attempt to gap downward – through $22, then $20, then ultimately the $18 to $19 price level.

This Weekly XLF chart highlights the longer-term Fibonacci Price Modeling System’s expectations showing the current downside price move has broken below the Bearish Fibonacci Price Trigger Level near $24.87.  At this point, the next lower support level is near $22.10 – just below the lower Gap level.

It is our opinion that the Financial Sector ETF will attempt to break below $22 in the near future and may attempt to fall to levels near or below $20.  The current support in the market from the $23 level may prompt a move into the upper Gap level before the next downside move begins – although we feel that is not likely to happen.

WEEKLY XLF CHART

Watch for a breakdown in price trading below $23.50 as an indication that weakness has prompted price to trade below the recent “Belt-Line” price level.  We believe a new close below $23.50 would be a good indication that the lower Gap is about to be filled and a deeper price move may take place targeting $20 to $21.

As the Q2 data starts to hit the news wires over the next 4+ weeks, we believe risks to the financial system will become very evident as a result of the COVID-19 shutdown.  Be prepared for increased volatility in almost all sectors and the very real potential for a retest of recent low price levels.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

Just think of this for a minute. While most of us have active trading accounts, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during the next bear market, you could lose 25-50% or more of your net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how. One of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Revisiting Our ADL Predictions for S&P 500

Our research team authored an article suggesting that our Adaptive Dynamic Learning Predictive Modeling system indicated the US major markets were 12% to 15% overvalued on May 23, 2020.  This was just before the last “euphoric” phase of the recent rally took began the week after our prediction.  From the date of May 23, 2020, to the recent peak in the markets, the SPY rallied another 9.72% above the price levels when we made the ADL prediction.  This suggests that the major markets rallied to levels near 21% to 24% overvalued near the recent peak.

Please take a moment to review our original ADL article here: https://www.thetechnicaltraders.com/predictive-modeling-suggests-us-markets-12-over-valued/

In keeping with our research team’s conclusions, the downside price move that initiated on Wednesday, June 10, 2020, after the US Fed statements, and really broke down on June 11, 2020, will likely continue resulting in the US major markets attempting to find support near our ADL predictive modeling system levels.  The downside price trend could extend below our ADL price target levels if the selling in the markets pushes into an extreme selling event.  It is not uncommon for the price to attempt to move through the ADL price levels attempting to find support and/or resistance.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

ORIGINAL ES ADL PREDICTED TARGET LEVEL WEEKLY

This is the ES chart showing our ADL predictive modeling system results from the May 23, 2020 date.  You can see the ADL predicted price levels near 2520 on this chart and the fact that the markets rallied away from these levels in late May created what we call a “price anomaly”.  This is when price moves away from the ADL levels in a manner that is somewhat unreasonable.  The same thing happened during the peak price level in early February 2018 and the October peak in 2018.

SPY ADL PREDICTED TARGET LEVEL DAILY

Based on our ADL predictive modeling system and the targeted price levels, we believe the SPY will fall to levels close to or below $260 over the next 10 to 15+ days.  It makes perfect sense that the markets over-extended a speculative price rally based on the context that the US economy would rebound from the COVID-19 shutdown.

Now that the US Fed has deflated that expectation and the riots and other issues related to social and political events are pending, we believe a “sudden realization” within the markets could send the US stock market price levels much lower over the next 2+ weeks – eventually attempting to find support near recent lows.

We actually posted our technical forecast for the market crash, the 30% rally, and called this blow-off top and reversal 4 days before it happened in this video a while back.

CONCLUDING THOUGHTS:

Remember, developing a winning strategy is not about trading every trend and day-trading every move, it is about timing your trades and strategically positioning your portfolio to take advantage of the “best asset now”.  We’ve developed proprietary technology that assists us in determining the best assets to be invested in and our predictive modeling and other proprietary tools assist us in identifying confirmed trade triggers.  Our objective is to assist our clients in generating consistent profits – not hundreds of trades.

If you were caught on the wrong side of this move recently, please remember that we tried to warn you of our multiple research articles and clear content.  We’ve been warning that this upside rally was a speculative price move driven by foreign and US investors believing the V-shaped recovery was real.  The reality of the situation is that this recovery is going to be much more volatile than many people believe.  This is a global economic event – not just a Fed Blip or some other isolated panic volatility.

You better stay on top of these trends and risks in the markets to stay ahead of these bigger moves.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

Just think of this for a minute. While most of us have active trading accounts, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during the next bear market, you could lose 25-50% or more of your net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how. One of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

The Black Swan Event for Stocks is About to Repeat

This hybrid article with videos walks you through what and why the markets crashed, what they are starting to do now, and how you can take advantage of this black swan event.

The year has been filled with big broad market swings, sell-offs, and rallies, making people pull their hair out and scream. Only those who don’t understand portfolio risk, position-sizing, and can’t read the charts are in pain this year. Unfortunately, that’s the majority of traders thought.

The video below covers what is happening in the markets this week, today, and what to expect looking forward several weeks, so get ready for some incredible market moves!

With that said this year has been a little slower with our portfolio simply because we focus on steady growth. We don’t ride the stock market rollercoaster, which has everyone stressed out. We see no point in holding positions and dealing with the stress which comes with it when you can sidestep it or better yet, profit from it.

My focus is on our BAN strategy, which stands for “Best Asset Now.” We review 30+ markets, sectors, commodities, and currencies to find the best opportunity with the lowest level of risk. We are not looking for a bunch of volatile trades. Instead, we shoot for a 1-4% return on our entire portfolio a month, which may sound dull but do the math, and you soon realize its tough to beat!

Price swings and volatility are high this year are extreme, which means we pear back the number of trades we make, and reduce position size to protect both our subscribers trading and investing accounts, along with our own.

This market volatility is attracting new traders to the market like a mosquito to a bug zapper light. We, on the other hand, take the opposite approach and step back to only cherry-pick a few low-risk trades here and there.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

When stocks and commodities are moving 10-92% a day as we have seen recently, it’s not the best time to be risking your hard-earned month because you can do a lot of damage quickly overnight with the way this market had been behaving.

Anyway, if you are looking for a simple, logical trading strategy with ETFs that is hitting new high watermarks for the year with less than a 3% drawdown on the year, then watch this video of my most recent analysis and prediction.

Here are the other two other videos I referenced in the video above: showing the price predictions before they happened.

FEB 21: BLACK SWAN EVENT BEGINS

We called the Black Swan Even late 2019, not knowing what it would be, then on February 21, we warned the black swan event had begun – Read Here.

We also warned of the waterfall sell-off before that on Jan 26 – Read here

MARCH 27: 30+% MARKET RALLY ANALYSIS:
HTTPS://YOUTU.BE/GZGQRBVDEY0

JUNE 5TH: MARKET RALLY TOP FOR THIS WEEK ANALYSIS
HTTPS://YOUTU.BE/MWGC_VOXYWA

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

Just think of this for a minute. While most of us have active trading accounts, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during the next bear market, you could lose 25-50% or more of your net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how. One of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Trend Higher for the Nasdaq will it Hold?

The trend higher for the Nasdaq-100 remains intact from a technical standpoint. The Tech Traders Founder Chris Vermeulen joins Jill Malandrino on Nasdaq to talk about if the trend will hold or reverse.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

Just think of this for a minute. While most of us have active trading accounts, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during the next bear market, you could lose 25-50% or more of your net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how. One of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Financial Sector Under Pressure and What It Means

The Financial sector is unique in that it is an essential component of global economics as well as local economic functions.  Consumers depend on banking services, credit, and all sorts of other financial services in their day-to-day lives.  The Financial sector is one of the components of the US stock market that can suddenly find itself under pricing pressure as an economic crisis event unfolds.  This happens because banks earn a large portion of their income from servicing debt and originating loans.

The recent rally in the Financial sector, over 47% from the March 2020 lows, has reached our proprietary Fibonacci price modeling system’s upside price targets and has also filled a major gap that was created in early March 2020.  Because of these factors, and the current downside price rotation within the Financial Sector, we believe this component of the US stock market could continue to see extended pricing pressure going forward as we learn just how damaging the past 70+ days of the economic shutdown have been for the economy.

We do know that certain consumers have quickly begun to pay off credit card debt.  We believe this is a learned trait from the 2008-09 market crisis where credit card rates skyrocketed as large numbers of consumers began defaulting on their homes and other types of credit.  We also know that delinquencies for autos and other sub-prime credit services have begun to skyrocket higher.  The sub-prime credit market is vastly different than it was in 2008-09.  Recently, Fintech and other new resources have allowed for extended sub-prime lending and leveraging within the US (Source: cnbc.com).

When you combine the sub-prime mortgage, auto, personal loans, personal Fintech margin capabilities, and sub-AAA corporate debt levels, the total amount of at-risk subprime debt must exceed $2 trillion US Dollars.  We believe this source of risk has been greatly underestimated in terms of risk to the Financial Sector over the next 12+ months (Source: zerohedge.com).

NON-100 LARGEST BANKS CREDIT CARD DELINQUENCY RATES

The current delinquency rate among the non-100 largest US banks for credit cards has already climbed well above the 2008-2010 peak levels.  It appears subprime borrowers are already pushed well beyond their limits in terms of servicing current debt levels.  This suggests a contraction in the credit market will likely take place over the next 24+ months as these at-risk borrowers default at greater rates.  This could transition into the housing market and other sectors of the economy if multiple waves of sub-prime borrowers stress the US financial system because of the COVID-19 shutdown.

XLF FINANCIAL ETF INDEX DAILY CHART

Our research team believes the peak in the XLF ETF has already set up after the recent 47%+ rally from the March lows.  The $27 price peak sets up directly between our two Fibonacci Daily upside price target (Peak) levels.  We believe this setup is a very strong indication that a move to below $23 may be setting up over the next 30+ days.  The Q2 data may very well push investors to re-evaluate the potential for the Financial sector if delinquencies and at-risk borrowers continue to default in greater numbers.

XLF FINANCIAL ETF INDEX WEEKLY CHART

This XLF Weekly chart highlights the recent rally and the “Gap” that recently filled.  It is our belief that the range between the MAGENTA horizontal lines represents a very clear support/resistance level within this longer-term XLF chart.  We believe that price will have to fall below $25 in order to initiate a deeper downside price move targeting recent low price levels or price will have to move above $27.50 in order to continue to rally.  Currently, our researchers believe the downside potential has a much higher probability of success as we get closer to the end of Q2:2020.

If our research is correct and XLF falls below the $25 price level, we believe it will target at least $22 to $22.50 before finding some support.  If it breaks below the $22 price level, it could fall well below the $20 price level again on weaker expectations.

These types of price swings can be incredible setups for skilled technical traders.  Follow our research and learn how we can help you find and execute better trades.  We recently executed a new swing trade for our members that is already showing great opportunity.  Protect your capital and learn to trade proven technical setups with our dedicated team of researchers and traders.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain, and we closed out another winning trade on Friday.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Staying Cautious & Staying Prepared With You Trading Account

Over the past 30+ days, our researchers have been warning our friends and followers to stay cautious and to consider the risks within this market trend.  Certainly, we’ve received some emails and contact from some people suggesting we should become more active, but we’ve also received many emails from members that feel we’ve kept them safely removed from the volatility and risks associated with this wild price rotation during these uncertain times.  Additionally, we’ve been able to grow their accounts at the same time.

One of the reasons we’ve been able to accomplish this is because our research team identified a major supercycle event that was likely near August 2019 and continued to warn our members of this potential event well ahead of the projected event date.  We also issued a Black Swan warning on February 21, 2020 warning all of our members to “get into cash” and to prepare for a very big price event.

Throughout this massive price rotation, we’ve been protected from risk by properly hedging our investments into Metals, Bonds, and other sectors all of which were profitable trades.  Our goal is to attempt to find the “Best Asset Now” known as our BAN strategy to keep our traders and investor safely positioned.  We try to avoid taking unwanted risks and wait for the markets to set up a proper trading trigger before executing a new trade.

In today’s article, we wanted to share a bit of longer-term research highlighting why we believe the current price rally may present some very real risk for certain traders and why we continue to be cautious in our actions.  There is plenty of time to wait for the markets to setup better trade triggers – we just can’t fall into the trap of being greedy and feeling like we have to trade all the time.  The reality of the markets is that more than 55% to 65% of the time we are waiting for trade setups.

SPY – S&P500 ETF WEEKLY CHART

This first chart is the SPY Weekly chart highlighting the price channels that are currently driving many facets of the current price rotation.

The shorter-term price channel, from 2015~16 till now, is suggesting the current price has rallied back to levels near the upper 1x Std. Deviation range.  This area is typically where we would expect the price to stall or set up some type of price retracement from recent peaks.  Applying the strategy to a longer-term price channel, we can see the price is already well above the 1x Std. Deviation channel and nearing the 2x level.  You’ll hear many people telling you this stock market rally is “forward-looking” and attempting to price in a future recovery of the US stock market and US economy.

We believe this current rally is more about speculation with the US and foreign investors piling into the US Fed based rally as the “best investment on the planet right now”.. and we believe we are starting to see signs that this rally is close to reaching a critical peak.

CUSTOM US STOCK MARKET INDEX WEEKLY CHART

This next chart is our Custom US Stock Market index using our Fibonacci Price Amplitude Arcs and a traditional Fibonacci Retracement.  Our Price Amplitude Arcs attempt to measure Fibonacci as it related to previous price trends and attempts to identify frequency and resonance (think Nikola Tesla) in relation to past and future price target and inflection points.  Currently, the Arc near the February peak is suggesting price is nearing a 0.764% Arc level – which is a fairly narrow price area near the original peak price level.  These “inner” price levels don’t often come back into play after price moves dramatically away from them – in most cases.  The fact that the SPY price level has recovered so quickly over time and is now targeting these inner arc levels suggests that volatility could become excessive again.

One other technical trigger our researchers want to point out is that price has reached the 0.8535% Fibonacci retracement level recently.  This is not a typical Fibonacci retracement level for many people.  There are important levels between 0.75% and 0.97% that are often very important when price sets up in a near Double Top or Bottom pattern.  These levels become important because they often reflect a “failure level” for price.

Currently, we are still warning of excessive risks and the very strong potential for a renewed spike in volatility (VIX). But until then we do not plan to step in front of this market when it’s rising.

VIX – VOLATILITY INDEX WEEKLY CHART

This VIX Weekly chart highlights the Flag formation that is setting up as the US stock market rallies back towards new all-time highs.  A tightening and narrowing FLAG formation is setting up in the VIX that suggests a breakout will occur fairly soon – likely with 7 to 10+ days.

Take a look at this short video we did showing what the technicals are starting to warn is coming.

Our objective is to help you navigate the risks and opportunities within the market to help you secure better and more consistent profits over time.  Think of this as a longer-term battle, not a short-term race.  Currently, there are a number of ETFs and market sectors that are on our radar (Utilities, Precious Metals, Miners, Consumer Staples, Technology, Biotech, and others).

Our objective is to identify the next big move and to time the trade entry so that we eliminate as much risk as possible for our members.  Right now, our research team believes there is a very high degree of risk in the markets for the reasons we have illustrated above.

There is plenty of time to find and execute great trades and we don’t mind waiting for the best opportunities with our accounts sitting in cash – protected from any and all risk.

The reason for today’s article is to help you understand what our research and trading team are seeing in the markets – the potential for new volatility and new risk factors to suddenly burst into the markets.  We are cautiously waiting for the markets to complete this setup and watching our trade setups for confirmation. Please consider this research article a suggestion to properly protect your open long positions and to properly hedge your portfolio accordingly.  If we are right, a spike in volatility may only be about 7 to 10 days away.

Chris Vermeulen: As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Investor and Swing Trading Newsletters had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain, and we closed out another winning trade last Friday.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

The Big Jobs Number and How to Trade It – Part II

In the first part of this research article, we attempting to highlight how the huge jobs number shocked the market into a big upside price move on Friday, June 5, 2020, and how the underlying data continues to suggest we have quite a bit of work to do before the US economy supports current stock market price levels.  In this second part of our research article, we’ll continue to share data and charts that we believe paint a very real picture for skilled technical traders.

The huge upside price rally in the US stock market after the 2.5 million jobs number was posted at 8:30 am pushed the stock market higher by 3.5%+.  This is an incredible rally in terms of how primed the stock market was for this type of great news.  Yet, as we continue to try to suggest, we are still moderately cautious of this rally in terms of sustainability after the destruction to the US and the global economy as a result of the COVID-19 virus event.

Our researchers believe the current numbers may be slightly skewed because of the extreme contraction event that took place over the past 60+ days.  Additionally, many of these numbers are calculated using a modeling system that attempts to normalize outlier data.  Currently, with the markets pushing well into a bullish territory and the NASDAQ reaching new all-time highs, we can’t argue that the US stock market appears to want to move higher on any news (good or bad).

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

NASDAQ (NQ) E-MINI FUTURES DAILY

This NQ Daily chart highlights the incredible rally we’ve seen in the tech-heavy NASDAQ.  After recovering nearly 50% from the March lows, the NQ began to set up an upward sloping wedge formation near the middle of April.  This tightening wedge formation has apex’ed recently just as we got the new jobs number today.

In an unbelievable upside price rally, the NQ is now trading at the highest levels EVER.  After 38 million jobs lost, the US economy operating at only a fraction of what it was in January, huge consumer displacement factors, and thousands of pending solvency issues – hey, why not push the NASDAQ up to new all-time highs.  This makes no sense to us at the moment.

NAS100/GC DAILY RATIO CHART

The reality is that this incredible rally in the stock market may have already become a speculator “bubble” – a euphoric over-reaction to the deep decline related to the COVID-19 virus event.  Earnings and future revenues typically drive valuation growth higher.  Take a look at this NAS100 to Gold ratio chart to understand what has really happened in the markets over the past 4+ years.  The peak in values in October 2018 coincided with the US Fed action to raise interest rates which prompted a massive decline in the US stock markets throughout the end of 2018.  Near Christmas, 2018, the markets bottomed and began to rally higher.  Notice the peak in 2019 was not higher than the peak in 2018?  This suggests the real valuation peak in the market coincided with the peak Fed Funds Rate level in October 2018.

Additionally, the downward price channel that has setup in this ratio chart suggests the wild trending in the markets while Gold has pushed moderately higher has prompted a sideways pennant/flag formation.   The previous peak, in early 2020, and the current peak are well above the upper pennant level – this suggests an over-exaggeration of price advancement.  This type of ratio activity is very reminiscent of 2005 to 2007 – where the stock market rallied and gold rallied, eventually leading to the breakdown in the stock market in 2008-09 and a much deeper breakdown in this ratio.

US ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX

The current economic data does not support a US stock market rallying to new all-time highs – unless you attempt to account for investor over-enthusiasm and exuberance.  The business activity data over the past few months have shown the deepest decline over the past 20+ years.  There has never been a print of this indicator below 30, ever, except April 2020.  Even at the height of the 2008-09 housing/credit market crisis or the 911 terrorist attacks, US businesses continued to operate at moderate levels.

(Source: https://www.investing.com/economic-calendar/ism-non-manufacturing-business-activity-1484 )

US UNEMPLOYMENT RATE MONTHLY

The unemployment rates are still far higher than at any time in over 70+ years – everything is fine.  Why not push the stock market price levels higher by another 20 to 25% – right?  These people will eventually find work somewhere – sometime??  The consumers will eventually re-engage in the economy and push income and revenue levels higher – but not right now.

(Source: https://www.investing.com/economic-calendar/unemployment-rate-300 )

US ISM MANUFACTURING INDEX MONTHLY

The ISM Manufacturing Index suggests manufacturers are operating 25 to 45% or below capacity levels from early January/February 2020.  This will translate into bottom-line revenue data in the near future and likely result in much lower forward earnings guidance.

(Source: https://www.investing.com/economic-calendar/ism-manufacturing-pmi-173 )

Our continued warnings may go unheeded by the masses – and maybe we are wrong.  Yet we continue to advise our clients to be very cautious of this upside price rally as we believe the technical factors driving this market are skewed.  Speculators and investors are caught up in an elated buying phase when real data suggests more moderate price valuations.  We are still very concerned about the risks of a breakdown in the markets related to a sudden shift in trader/speculator thinking.

Very similar to the enthusiasm of 2006 to 2008, traders can sometimes fall into a trap that expectations do not correlate with real data/technicals – and this can be dangerous.  If you play these upside moves very cautiously and target the best asset for your investment objectives, you can do very well while this rally pushes higher.  Yet, you also have to be very aware of the risks of a breakdown in price related to the tightening economic conditions and price channels.

YM – DOW JONES E-MINI FUTURES 30 MINUTE CHART

This YM 30-minute chart highlights the incredible rally that took place very early in trading on June 5, 2020 – just after the jobs number hit.  The traders and speculators want anything that seems positive after months of uncertainty related to the COVID-19 virus event.  This bias towards anything positive suggests traders will attempt to push price levels into a feeding frenzy – ignoring all risks and other data.  No Fear is an excellent description of what is happening right now in the US stock market – traders have absolutely no fear of any downside risks.  We’ve seen this before – and it usually ends badly for some people (remember the DOT COM rally?).

CONCLUDING THOUGHTS

Our opinion is that traders should stay moderately cautious near these current levels.  Even though it appears the markets can do nothing wrong and speculators will likely be telling you “this is the opportunity of a lifetime – just buy anything right now”, our experience is that these types of crazy, euphoric rallies are very dangerous.  Price breakdowns come fast and hard in markets like this – they happen quickly.

Cover your open long trades with moderate stop levels.  Be picky about what you invest in and target quick gains.  Remember the market can act irrationally much longer than many people can stay whole.  The shorts are under severe pressure right now, but the data is pointing to a very different outcome in our opinion.  We urge you to stay cautious right now – this seems very similar to the exuberance that we saw in 2006-2008 – just before it all fell apart.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain, and we closed out another winning trade on Friday.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Surprise Jobs Number and What It Means For Your Positions

The Huge Non-Farm Payroll number released on Friday, June 5th, shocked the market.  A massive 2.5 million jobs were created in May 2020.  If you were paying attention to the data, you’ll also understand that 1.87 million new jobless claims just last week.  In fact, over the month of May 2020, a total of 12.58 million jobless claims were filed.  Taken into consideration, the new jobs created in May represent less than 20% of the total job losses over the same span of time.

Our researchers believe the jobs number is representative of a phased reopening of many US states and correlates directly with the extended opportunity for further re-engagement of the US economy over time.  The current social unrest taking place throughout the US will likely result in a new spike in COVID-19 cases as well as extended losses for certain businesses.

The rioting seems to be taking place in more populated states right now – which suggests some real concerns for many of these states in regards to scheduled reopening phases and the potential for a spike in COVID-19 cases.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

US MAP – STATES REOPENING STATUS

As you can see from the US map, below, the number of states that have started to reopen over the past 30+ days exceeds the number of states still shutdown or partially open.  Our researchers believe the migration of the protesters from state to state as well as the continued unrest throughout the US may prompt a new spike in COVID-19 cases – particularly within states that have had the highest transmission rates and are more populated than other states.

US NON-FARM PAYROLL MONTHLY

The May 2020 Non-Farm Payroll number is a welcome positive surge after many months of negative data.  Still, as we suggested near the start of this article, the 2.5 million new jobs created did not offset the 12.58 million jobs lost in May 2020.  Anyone capable of doing simple accounting can figure out that we need to see more continued new job creation levels to begin to offset the massive layoffs and job losses as a result of the COVID-19 shutdown event.

The US Stock market is hungry for any positive news right now, so the markets look at this data as a very positive sign that a recovery will happen and could be a stupendous opportunity for future growth.  Our researchers are still very cautious about this recovery simply because the underlying data is still very negative overall.

US JOBLESS CLAIMS – WEEKLY

As you can see from this Weekly Jobless Claims chart, below, the spike in new jobless claims happened in early April 2020 with 6.86 million new jobless.  Since then, the number of new jobless has continued at levels greater than 2 million per week and have slowly been decreasing.  We are aware that many states are reducing state and educational employment budgets as a result of the COVID-19 virus event.  These budget cuts and layoffs may continue throughout all of 2020 and into 2021 unless a strong recovery event takes place before the end of 2020.

State budgets and the continued risks of a COVID-19 case spike present very real concerns in the minds of our researchers as we have just begun the initial reopening phases for many states.  If our presumptions are correct, the social unrest and rioting may prompt a major spike in COVID-19 cases across many states and present a very real extended shutdown event that could last well into late-Summer.

PUT/CALL RATIO – DAILY

This next chart suggests there is “No Fear” in the markets right now as investors pile into the long trades.  This Put/Call ratio chart highlights one simple fact that the market can stay irrational for much longer than many traders can handle.

The Fed intrusion into the markets on March 20, 2020, created a bullish foundation in the markets.  Traders have piled into this bullish trend over the past 45+ days and this Put/Call chart highlights how extended the rally has gotten recently.  Normally, the extremely low levels on the Put/Call chart would suggest a massive market top setup is about to happen – yet, traders may push the markets further into an irrational bullish phase with their exuberance.

We put together a short yet detailed video that will open your eyes to what the market data and charts are pointing to. If you are short the market of having FOMO (Fear Of Missing Out) on this rally be sure to click and watch this video right after you finish this article.

CONCLUDING THOUGHTS:

The reason we stay cautiously related to this bullish price trend in the US stock market is that we believe technical patterns have already set up that suggest a downward price cycle must complete before the bottom in the markets is settled.  In Part II of this article, we’ll go over additional charts and data to help you plan for and prepare for the next big move in the markets.

If the markets are able to push much higher after today’s big jobs number, we urge all long/bullish traders to lock in gains with protective stops and to adopt a very cautious outlook going forward.  It appears the markets have over-extended this rally and we are still very concerned that a sudden breakdown in price will happen.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

Just think of this for a minute. While most of us have active trading accounts, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during the next bear market, you could lose 25-50% or more of your net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how. One of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

US Stock Market Sets Up Technical Patterns – Pay Attention

The recent “melt-up” in the US stock market after a moderate downside price move in early May 2020 has set up a number of technical patterns that traders need to pay attention to.  This melt-up trend may continue for a bit longer, but price levels and actions are beginning to set up very clear patterns that warn of potential weakness in the future.

First, no matter how we attempt to spin the data, the US economy is very likely to fall into a moderate recession after the COVID-19 virus event has created a world-wide economic event and the recent riots and protests all across the US continue to disrupt and destroy property, businesses, and other assets.

It is almost like a one-two-three series of punches leading to a TKO.  We have the virus event, the stay-at-home orders, and now the riots and protests.  Recently, the National Guard has been called out to support local law enforcement and to protect people and properties. From our perspective, the situation is very far away from stable economic activity/growth supporting current stock price activity/levels.

We have been urging our friends and followers to be very cautious of long-side trades and to execute them with very narrow parameters, minor position sizes, and easy/tight targets and stops.  The reason for this is because we are not confident that the underlying global economic fundamentals support the current price trends and activities.  Yes, the US Fed is pouring trillions into the economy attempting to support the US and global markets, but the view from the ground level is very different from the Wall Street office on the 20th floor.

The GDP-Based Recession Indicator Index has risen to the highest levels since Q1:2008 as of April 2020 data.  If it continues higher with the May 2020 data point, we’ll have more evidence that the US economy has entered the early stages of an economic recession.  Remember, in early 2008, the US stock market had already begun to collapse more than 20% from recent highs.  Currently, the SPY is trading only -9.63% below the all-time high levels.  Our researchers continue to believe the US stock market is overvalued by at least 11% to 15% at current levels.

GDP-BASED RECESSION INDICATOR INDEX

We continue to urge technical traders to be very cautious of the potential “washout-high” price pattern that is setting up and we continue to urge our followers to be very selective of active long trades.  There is money to be made in this trend and certain sectors and symbols have rallied 10 to 15% over the past 4+ weeks – but technical traders need to be very aware of the active risks still playing out in the markets.

Before we continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

This Daily YM (Dow Jones E-Mini Futures Chart), highlights the major resistance levels near current price highs.  The first, the MAGENTA line originates from our Adaptive Fibonacci Price Modeling system and is a key target/price level originating from the all-time price peak level.  The reason this level is so important is that it continues to reflect the prominent downside price move/trend and this key Fibonacci level is still active until it is breached by price moving/closing above this level.

Second, the current Adaptive Fibonacci Price modeling system trigger level is highlighted in YELLOW.  This level is going to act as a “trigger point” in price.  If price rallies above this level and closes above this level, then we may see more upward price activity over the next few days/weeks.  If price fails to close above this level and stays below this level, then we interpret this as a failure to achieve the trigger level and it would suggest that price may begin to move downward – away from this critical price trigger level.

Watch for the YM to move to levels near or above 25,600 and watch how it reacts to this key resistance level.  If it rallies above this level then fails and begins to move dramatically lower – this level is being rejected and a new bearish trend may setup.  If it moves above this level and closes above this level, then we have confirmation of a potential upside price trend and bullish trending may continue for a bit longer. If you are new to trading you can use TradingSim to paper trade and practice day trading.

DOW JONES E-MINI FUTURES DAILY CHART

This next Weekly chart, the IWM (Ishares Russell 2000 ETF), highlights another key technical pattern – a Gap Fill.  We’ve been watching how capital has transitioned from the NASDAQ and S&P500 and into the Mid-Caps and other sectors over the past 4+ weeks.  Once the major indexes began to reach levels near the past all-time highs, capital began seeking out undervalued sectors and technical traders began rotating into these sectors expecting a moderate price rally to occur.

Not that the Russell 2000 has rallied up to fill this gap, it is very likely that some level of moderate price weakness will setup – possibly pushing price levels lower.  A Gap Fill is a technical pattern that suggests any Gap in price will eventually get filled by future price activity.  Once this Gap is Filled, the price has completed a technical pattern to “fill the void”.  After the Gap is filled, price usually stalls and moves in the opposite direction for a period of time – establishing a new base for a new momentum move.

We believe the filling of the GAP on this IWM chart suggests the Mid-Caps may have reached a key resistance level and may begin to move downward in the near future – likely attempting to establish a new momentum base near the $122 level.

IWM – ISHARES RUSSELL 2000 ETF WEEKLY CHART

We love this market volatility and how various sectors are rotating right now.  It presents incredible opportunities to be able to select new trades.  We are still being very cautious overall with our portfolio.  We’ve been able to achieve new highs in our accounts by selectively trading various symbols and targeting exit points using our proprietary trading technology.  Right now, we have two active trades that continue to generate solid profits.  No reason to go crazy trying to pick dozens of trades with our “Best Asset Now” modeling system.  It allows us to attempt to stay active while trading the best asset class in the markets.

Watch how the markets react this week and early next week.  We recently posted a research article about the US Presidential cycle and how June/July is often very difficult months in an election year.  You may find this research article very informative as we push forward into the Summer months of this 2020 election hear

Election Year Cycles – What To Expect?: https://www.thetechnicaltraders.com/election-year-cycles-what-to-expect/

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Important Trade and Investment Alert Was Issued

This massive bounce/rally, whatever you want to call it is playing out exactly as planned.

We locked in partial profits on our simple investing portfolio SPY ETF position and now entered another new position for much larger gains until it gets more exhausted. But don’t be fooled by this sucker’s rally. This is the beginning of the end as I showed the charts and explained here.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow out long term capital when things get ugly like they are now and ill show you how.

We just issued this trade alert to members of The Technical Investor newsletter which allows members to protect their wealth and assets while continuing to take advantage of opportunities generated by the US and global markets.  This is the first trade alert issued in 2020 of this kind.

If you are an active investor or traders, have a retirement account of any type or have assets in the stock market, then we urge you to take action and sign up to get this investment trade signal.

Our focus is to help traders and investors protect and grow their wealth. We use proprietary price modeling tools that can’t be found anywhere else.  Our combined 55+ years investing and active trading experience provides you with incredible insight and opportunity.

Passive investing is something for the “other guys”.  If you want to grow your wealth, protect your assets, and learn to take advantage of the biggest price swings in the markets, then you need to follow our research and price modeling systems with us.

If you are concerned this may too be active for you, just know that we only buy the SP500 ETFs or move your money to cash where it is the most effective at times. If you can call your broker and tell them what to do with our alert instruction, or if you can place the trades yourself, then you can follow these investing signals.

Remember, bull market trades will last 5-12 years, bear market trades will last 1-3 years. No matter what, we can make money during both markets.

Each year we have 2-3 trade opportunities to add new capital to the market if you more money to add to your position.

Since 2007, Passive Investing would have returned only 53.75% ROI – only 4.48% annually.  Active investing using our proprietary price modeling systems and deploying our proprietary position allocation modeling tools returned over 135% ROI – a 11.49% annually over the same time period.  That’s a whopping 230% more annual return than simply letting your investments ride out the market fluctuations.

Allow us to take a minute to explain just how powerful this advantage really is to you.

Imagine you started with a $100,000 account and compared the difference between a passive investment style and TheTechnicalInvestor.com trading style over a span of 10 to 15 years.  Most investors contribute to their retirement accounts over a 25+ year span of time – possibly longer.  The difference between the two styles of investing is dramatically different in terms of the final results:

At the 5 year mark, the difference between the two styles is almost $48,000 in extra profits (over +38% more growth for your assets).

At the 10 year mark, the difference between the two styles is almost $140,000 in extra profits (over +91% more growth for your assets).

At the 15 year mark, the difference between the two styles is almost $318,000 in extra profits (over +164% more growth for your assets).

After the 15 year example (assuming your passive investment style maintained a 4.48% annual ROI and our active investment style maintained an 11.49% annual ROI), the results are stunning.

With passive investing, you would have nearly DOUBLED your assets and wealth.

With TheTechnicalInvestor.com active investing, you would have more than TRIPLED your assets and wealth.

When you add our proprietary “re-entry” triggering system, the numbers explode to +40% annual ROI with 1x leverage; 3512% with 2x leverage; 9417% with 3x leverage.

The difference is that we help you navigate the bigger price swings/trends in the market and actively help you manage your allocation in the markets using our proprietary price and position sizing technology.

What’s the cost for TheTechnicalInvestor.com? $249 per year or $149 every 6 months.  Annually that breaks down to about $21 a month, which is $1 per trading day to know you are on the right side of the market.

Isn’t it time you took advantage of proprietary technology and services and started to create even more opportunities to grow your assets?  The market volatility recently has created an incredible opportunity for everyone that has a retirement/401k account.  Now is the time to focus on these big price swings because this is when opportunities are created to grow your wealth 3 to 5 times faster.

Visit www.TheTechnicalInvestor.com to learn more.  Sign up today to learn what our newest trade alert action is all about and how you can start profiting from these huge price swings in the future.  $21 a month is nothing when you really think about it.  Join our other subscribers in learning to protect and grow your wealth with our technology today.

Chris Vermeulen
Chief Market Strategiest
Found of Technical Traders Ltd.